Money Saving Expert Martin Lewis has revealed a credit card trick that could save Brits thousands of pounds a year. The trick, called 'stoozing', involves purposefully getting into debt to eventually end up with more money in savings. It is high risk and not for everyone.
How stoozing works
The method works when customers take out a 0% credit card that gives interest-free spending for between 12 and 16 months. This card is then used for bills and everyday spending, with all unspent cash going into a high-interest savings account to maximise payout. Monthly minimums must be paid and never go over the credit limit or interest will rise.
Martin Lewis said he has used 'stoozing', borrowing money at 0% interest and then putting it in a high-interest savings account with 6% interest. He said some savers are able to gain £5,000 in savings every year using the trick.
Reader success and warnings
One reader said: “Stoozing which has saved us £1,000s over the time we've been doing it by persistently holding five figure sums at 0%. We currently save over £600 every year with just 2 cards. A massive thank you to Martin and the team!”
But it comes with a warning. Stoozing should only be done if you are debt-free and feel confident and organised with your money. Those with a poor credit score, overdrafts, and loan debt should steer clear.
Golden safety rules
The Money Saving Expert gave some golden safety rules:
- Always pay the monthly minimum. Set up a Direct Debit to repay the monthly minimum and don't bust the credit limit, or you can lose the 0% deal.
- Only use your stoozing card for your everyday spending – never make cash withdrawals or shift debt to it, as you could find yourself unnecessarily paying hefty fees and interest.
- Make sure you pay off the debt before the 0% period ends or transfer it to a low or no-fee 0% balance transfer card. If you don't, the interest rate will jump to around 25% APR (or more), killing any gain.
- Do not take risks with the stooze pot. If you do, you could find the debt you have deliberately manufactured becomes real debt.
- Stoozing debt is still a debt, so impacts your creditworthiness. In credit score terms, you're still borrowing money, so it impacts your credit while you have the debt. If you've an important application like a mortgage due, bear that in mind.
